Beyond Oil: Why Private Equity's Giants Are Planting a Flag in Abu Dhabi

ABU DHABI, UAE – December 16, 2025 – The announcement that Lexington Partners, a titan in the private equity secondary market, is opening a new office in Abu Dhabi might seem like a standard corporate expansion. But to view it as merely another pin on a global map is to miss the tectonic shifts happening beneath the surface of international finance. This move is not an isolated event; it is a powerful signal of a broader, accelerating trend: the Middle East, and Abu Dhabi in particular, is rapidly evolving from a source of capital into a strategic center for global investment.

Lexington, a specialist investment manager of Franklin Templeton with over $82 billion in capital, is joining a growing caravan of elite financial firms. In recent years, a who's who of private equity and asset management—including giants like KKR, Ardian, General Atlantic, and Blue Owl—have either established or significantly expanded their presence in the region. This influx is no coincidence. It is a calculated response to a powerful combination of economic ambition, regulatory innovation, and a maturing investment landscape.

The Gulf's Gravitational Pull

For decades, the narrative of Middle Eastern finance was dominated by outbound investment, as sovereign wealth funds (SWFs) and family offices deployed vast oil revenues into Western markets. That dynamic is now becoming a two-way street. The private equity market in the Middle East and Africa, valued at over $45 billion in 2025, is projected to surge past $75 billion by 2030. In the first half of 2025 alone, deal value in the MENA region hit a staggering $13.8 billion, on track to set a new annual record.

This growth is fueled by aggressive national strategies, like Abu Dhabi's Economic Vision, which aim to diversify economies away from hydrocarbon dependence. Governments are pouring capital into knowledge-based sectors like technology, healthcare, renewable energy, and digital infrastructure, creating a fertile ground for private investment. This isn't just about deploying capital anymore; it's about building entire ecosystems. SWFs like Abu Dhabi's Mubadala and ADQ are no longer just passive limited partners (LPs); they are sophisticated co-investors and direct dealmakers, creating a powerful gravitational pull for firms that can bring global expertise and opportunities to their doorstep.

The presence of such immense, concentrated capital creates a self-reinforcing cycle. As one senior market analyst noted, "Where the big pools of capital reside, the managers will inevitably follow. The difference now is that they aren't just coming to fundraise; they're coming to invest, transact, and build permanent infrastructure."

A Haven Built on Regulation and Vision

Abu Dhabi's ascent as a financial hub is not accidental; it is the result of meticulous planning and the creation of a world-class regulatory environment. The centerpiece of this strategy is the Abu Dhabi Global Market (ADGM), a financial free zone that has become a magnet for international firms. Established in 2015, the ADGM offers a powerful trifecta of incentives: a legal framework based on English common law, a zero-percent corporate tax rate for qualifying firms, and the ability for 100% foreign ownership.

This structure provides the legal certainty and financial efficiency that global institutions demand. For a firm like Lexington, operating in the complex world of secondary private equity transactions, the clarity and stability of a common law jurisdiction are paramount. It removes ambiguity and streamlines the intricate legal processes involved in buying and selling private fund stakes. The ADGM has proven wildly successful, with assets under management jumping 42% in the first half of 2025, cementing its status as the largest financial hub in the MENA region.

This regulatory hospitality, combined with the UAE's broader pro-business policies, has effectively rolled out the red carpet for the world's financial elite. By creating a plug-and-play ecosystem, Abu Dhabi has dramatically lowered the barrier to entry, allowing firms to focus on what they do best: managing capital and sourcing deals.

The Liquidity Imperative

The most telling aspect of Lexington's expansion is its specific expertise. As a pioneer of the secondary private equity market, the firm specializes in providing liquidity to investors in an inherently illiquid asset class. Its new Abu Dhabi office is explicitly tasked not only with serving capital partners but also with providing "liquidity solutions to the region's institutional allocators." This is a critical distinction. It signals that the region's massive private equity portfolios, built over decades, are maturing and now require more sophisticated management.

Globally, a challenging fundraising environment and volatile exit markets have created a backlog of unsold companies within private equity funds. This has fueled a boom in the secondary market, as LPs seek ways to realize returns or rebalance portfolios without waiting for a traditional IPO or sale. By establishing a physical presence, Lexington is positioning itself to meet this burgeoning regional demand head-on.

The relocation of Thomas Dunn, a Director from the firm's London-based secondary investment team, underscores this commitment. This is not simply a sales and relationship office; it is the foundation of a local investment capability. Leadership will come from Doug Bourne, a 15-year veteran of the region's investment scene, who noted, "I am fortunate to have the opportunity to bring my relationships in the region to a firm such as Lexington with its strong reputation."

A Piece in a Global Alternatives Puzzle

Zooming out, Lexington's Abu Dhabi office is a strategic piece in a much larger puzzle being assembled by its parent company, Franklin Templeton. The global asset management giant has made a massive push into alternative investments, which now account for over $258 billion of its assets under management. Franklin Templeton's strategy has been to acquire and integrate best-in-class specialist managers like Lexington to build a diversified, global alternatives platform.

From this perspective, the Abu Dhabi expansion is a textbook execution of that strategy. It extends the reach of its premier secondary private equity specialist into one of the world's most important and fastest-growing capital markets. As Wil Warren, Partner and President of Lexington, stated, "Opening in Abu Dhabi represents a natural extension of Lexington's global platform and builds upon our long-term relationships across the Middle East. The region has been an increasingly important partner for us."

This move strengthens Franklin Templeton's competitive position, allowing it to offer its institutional clients on-the-ground expertise in a critical geography. It demonstrates a holistic approach where global scale is leveraged to support specialized, local execution. The new office is both a response to regional demand and a key component of a worldwide strategy to dominate the alternatives space.

The establishment of such a sophisticated market player in Abu Dhabi is more than just a business expansion. It is a testament to the region's successful transformation and a clear indicator of the future of private capital. It marks a definitive shift from the Middle East being merely a source of funds to becoming a central arena where the complex machinery of global finance is built and operated.